VOLUME 21, NO. 8 THE TIPRO TARGET APRIL 18, 2019 Texas Independent PRESIDENT TRUMP ISSUES NEW ORDERS Producers and SUPPORTING AMERICA’S OIL & GAS INDUSTRY Royalty Owners Association President Donald Trump took bold action this month to help America’s energy industry by issuing new executive orders that direct the federal government to provide support for development of much-needed energy infrastructure in the United States, including improved permitting processes for pipeline construction. The president signed the new orders on Wednesday, April 10th while on a visit to the Lone Star State. Under the president’s directive, federal agencies have been tasked with removing regulatory and permitting barriers for infrastructure projects. Specifically, the U.S. Environmental Protection Agency (EPA) has been instructed to update its guidance regarding certification under section 401 of the Clean Water Act, which has seen inconsistent implementation in some states that has hindered infrastructure development. EPA Administrator Andrew Wheeler has indicated that the agency will immediately engage state and tribal partners to identify ways to modernize the 401 certification process and accelerate infrastructure projects. Additionally, the U.S. Department of Transportation has been charged with modernizing its regulations relating to Liquefied Natural Gas (LNG) development. Through his executive order, President Trump also has provided clarification that any decision to issue a Presidential permit for cross-border infrastructure projects shall be made solely by the president. The secretary of state will continue to receive permit applications and provide advice to the president on whether a project would serve United States foreign policy interests, but final approval will be granted by the commander-in-chief. TIPRO commends President Trump for his latest orders that support America’s oil and natural gas industry by removing unnecessary red tape and cutting permitting delays for energy infrastructure projects, a top priority at this time for the oil and gas sector. The directives will allow the country to build the infrastructure that is needed to fully capitalize on the energy boom that has swept the nation. U.S. CRUDE PRODUCTION GROWS 17 PERCENT IN 2018, AS OIL EXPORTS NEARLY DOUBLE America’s oil output continues to hit staggering levels, new data from the U.S. government confirms. Statistics recently released from the U.S. Energy Information Administration (EIA) show that in 2018, domestic oil production grew by 17 percent! EIA reports that last year, annual U.S. crude oil production reached a record level of 10.96 million barrels per day (b/d), 1.6 million b/d higher than production levels recorded in 2017. The country’s oil output shows no signs of slowing down, either -- experts forecast U.S. oil production to keep rising in 2019, and 2020 as well, averaging 12.3 million b/d and 13.0 million b/d, respectively. Home to the nation’s most prolific oil fields, Texas supplied a majority of the nation’s oil produced last year. In 2018, the Lone Star State contributed 40 percent of U.S. production, again solidifying Texas’ title as the top oil producing state in the nation. Texas has held the top position nearly every year since 1970, notes the EIA (with the brief exception of 1988, when Alaska produced more crude oil than Texas, and then from 1999 through 2011, when production from the Federal Offshore Gulf of Mexico region was higher). “Texas crude oil production averaged 4.4 million b/d in 2018 and reached a record-high monthly production level of 4.9 million b/d in December 2018. Texas’s 2018 annual production increase of almost 950,000 b/d—driven by significant growth within the Permian region in western Texas—was nearly 60 percent of the total U.S. increase,” according to the EIA. “Growth in the Permian region, which spans parts of Texas and New Mexico, also drove a 215,000 b/d, or 45 percent, production increase in New Mexico. This level was the second-largest state-level growth in 2018 and accounted for 13 percent of the total U.S. increase, setting a new annual record production level in New Mexico.” With such strong volumes of domestic oil production, the United States has also increasingly grown its exports of crude shipped to nations around the world. In fact, in 2018, the U.S. nearly doubled its volume of crude oil exports. Story continued on Page 5... Page 2 April 18, 2019 THE TIPRO TARGET PRESIDENT’S MESSAGE TIPRO Members, Working in collaboration with other industry trade organizations and business associations, this session, TIPRO is calling for the legislature to support House Bill 1000 by House Energy Resources Chairman Chris Paddie. Known as the “Texas Rural and Opportunity Zone Jobs Act,” this policy proposal seeks to stimulate economic growth and boost job creation in small, rural communities throughout the Lone Star State. To accomplish such goals, House Bill 1000, and its companion Senate Bill 826 by Senate Business & Commerce Chairman Kelly Hancock, would establish a tax credit program offering greater incentive to investors to provide private sector capital for businesses located in small Texas communities. With more reliable access to capital funding and a more stable economic market, businesses in rural areas of Texas will see new opportunities to expand and grow, which in turn will advance the economic security for the entire state of Texas. Many of the objectives from this Jobs Act align with initiatives promoted by our industry, and regularly endorsed by TIPRO. Our association works year-round to advocate for policies that will enable economic prosperity and promote job creation in the state of Texas. Ed Longanecker Already, the Texas oil and gas industry directly supports hundreds of thousands of well-paid, quality jobs, with a rising number of open positions available to those seeking employment. In addition to the 352,000 jobs provided by our industry, according to TIPRO analysis, between February and March of this year, there were 98,049 total job postings listed for the Texas oil and natural gas industry, of which 16,107 were unique. Employment postings for the industry have held a posting intensity of 6-to-1, meaning that for every six postings, there has been one unique job posting. This is close to the posting intensity for all other occupations and companies in the region (5-to-1), indicating an average effort toward hiring for these positions. The cities of Houston and Midland offer the greatest number of energy jobs in the state. Employers have posted most frequently in search of heavy and tractor-trailer truck drivers, though other occupations such as retail salespersons, maintenance and repair workers, accountants, engineers and supervisors have also been heavily sought after by Texas oil and gas companies. Although the industry currently is seeing healthy expansion with strong employment numbers, we appreciate the efforts by our state lawmakers to further spur job creation in Texas and position Texas businesses to grow in the future. That’s why we are pleased to support House Bill 1000 and other legislation that will benefit our workforce and economy. House Bill 1000 was successfully passed by the House on Tuesday, April 16, and now has been sent to the Senate chamber for review. Our team is lobbying to encourage our state senators to vote in favor of this policy so it can be approved by the legislature and sent to the governor to become law. Meanwhile, in efforts to notify stakeholders on the latest efforts to incentivize job creation in rural and distressed communities in Texas -- and share developments from the capitol on the progress of the “Texas Rural and Opportunity Zone Jobs Act” -- a new resource website was launched this past week. I encourage TIPRO members to take a moment to check out this website by visiting growruraltxjobs.com to see timely updates and keep informed of the latest news tied to House Bill 1000. Thank you, Ed Longanecker TEXAS’ TOP THREE STATE LEADERS PROPOSE INCREASE TO STATE SALES TAX Texas’ three highest ranking officials, Governor Greg Abbott, Lieutenant Governor Dan Patrick and Speaker of the Texas House Dennis Bonnen, in April released a joint proposal that calls for an increase to the state sales tax rate. The proposition put forth would raise the tax that consumers pay when shopping from 6.25 percent to 7.25 percent in order to generate revenue offseting desired cuts to property taxes. In a joint statement, the three leaders said, “We are introducing a sales tax proposal to buy down property tax rates for all Texas homeowners and businesses, once Senate Bill 2 or House Bill 2 is agreed to and passed by both chambers. If the one-cent increase in the sales tax passes, it will result in billions of dollars in revenue to help drive down property taxes in the short and long term.” While property tax reform has been a top priority this session in the Texas legislature as lawmakers seek to provide relief for Texas homeowners and business owners, it remains unclear how much buy-in the sales tax hike will see from state legislators. House and Senate leaders have indicated they will seek to make the change through a constitutional amendment, which would require votes from two-thirds of lawmakers in both chambers in order to advance. Ratification of the amendment would then require voter approval in a statewide election. According to sources, while he supports the effort, Governor Abbott has reportedly said he won’t ultimately sign off on the measure unless lawmakers also pass bills that limit local property tax increases. TIPRO Calendar of Events MAY 8, 2019 JUNE 12, 2019 JULY 10, 2019 AUGUST 7-9, 2019 HOUSTON — IPAA/TIPRO HOUSTON — IPAA/TIPRO HOUSTON — IPAA/TIPRO SAN ANTONIO — TIPRO’s Leaders in Industry Leaders in Industry Leaders in Industry 2019 Summer Conference, Luncheon, 11:30 a.m.